Price No Object!: The Impact of Power Distance Belief on Consumers’ Price Sensitivity

Abstract

The role of culture in consumers’ price search and behavior has received limited attention in the literature. In the present research, the authors examine how the cultural dimension of power distance belief (PDB)—the extent to which people accept and endorse hierarchy—influences consumers’ price sensitivity. The authors propose that consumers high (vs. low) in PDB are less price sensitive because they have a higher need for closure, which motivates them to “seize and freeze” on a current offer and quickly arrive at the final purchase decision rather than search for a better price. Accordingly, the relationship between PDB and price sensitivity is moderated by variables that alter consumers’ need for closure, such as social density. Six studies (and five more summarized in the Web Appendices) using a variety of operationalizations of the key variables provide robust support for the relationship between PDB and price sensitivity and shed light on the underlying mechanisms and boundary conditions. Theoretical and managerial implications are discussed.

Cross-National Differences in Market Response: Line-Length, Price, and Distribution Elasticities in 14 Indo-Pacific Rim Economies

“…Consumers in these societies respond more strongly to product assortments, and a wide assortment is more valued because demand is more heterogeneous along socially stratified lines. Stronger focus on status consumption is associated with reduced price sensitivity (Lee, Lalwani, and Wang 2020). The greater importance of material goods suggests that people may be more involved with this consumer activity (Goldsmith, Flynn, and Kim 2010) and more willing to exert effort to acquire the product, which explains the lower sensitivity to distribution in high-power-distance countries.…”

When do people rely more on unique versus common attributes? The effect of power distance belief on preference for alignable versus nonalignable attributes

“…Moreover, high PDB individuals believe that everyone should have a defined place (Gao et al, 2016;Hofstede, 2001;Oyserman, 2006) and prefer company-designed products over user-designed products (Paharia & Swaminathan, 2019), which suggests that they are less creative and open. Other research has shown a positive relationship between PDB and need for closure (Lee et al, 2020)-a desire to receive a firm answer to questions (Kruglanski, 2013). As need for closure reduces cognitive flexibility (Kossowska et al, 2015), this finding suggests that individuals with high PDB may have lower cognitive flexibility.…”

“…We also tested whether alternative explanations could explain the relationship between PDB and preference for alignable (vs. nonalignable) attributes. First, one may argue that high PDB individuals tend to focus on alignable attributes because they have a greater need for closure (Lee et al, 2020). Research has shown that the alignability effect was more dominant among individuals with a higher need for closure (Zhang et al, 2002).…”

Heart or Mind? The Impact of Power Distance Belief on the Persuasiveness of Cognitive Versus Affective Appeals in Education Marketing Messages

“…High-PDB individuals believe that inequalities are facts of life to which one must accommodate, whereas low-PDB individuals believe in the inherent equal worth of all people and perceive inequality as illegitimate. Recent consumer research has shown that PDB affects a wide range of consumer behaviors (Web Appendix A), including but not limited to charitable donations (Han, Lalwani, and Duhachek 2017;Winterich and Zhang 2014), price-quality judgments (Lalwani and Forcum 2016), preference for user-designed products (Song, Jung, and Zhang 2021;Paharia and Swaminathan 2019), attitudes toward celebrity endorsements (Winterich, Gangwar, and Grewal 2018), price sensitivity (Lee, Lalwani, and Wang 2020), and reactions to company moral transgressions (Xu, Bolton, and Winterich 2021). Introducing PDB to the education marketing context, we propose that PDB induces different learning mindsets that affect consumer preferences for education products with different types of marketing appeal.…”

“…As a result, high-PDB individuals are more motivated to arrive at a conclusion and reach an outcome with less concern about the process. As Lee, Lalwani, and Wang (2020) point out, high-PDB individuals tend to have higher need for closure than their low-PDB counterparts. Similarly, Carl, Javidan, and Gupta (2004) indicated that the process of discussion, such as embracing different values and sharing divergent opinions, although preferred by low-PDB consumers, is considered less productive and a threat to the established hierarchy by high-PDB consumers.…”